In this new working paper, Joseph Johnson, Ph.D., examines the costs of regulations implementing the Clean Water Act (CWA). The paper updates and extends past estimates to assess the costs water pollution control regulations impose on American citizens (as consumers and taxpayers). Utilizing a cost estimation method similar to that used in the past by EPA, the author estimates that the costs of complying with water quality regulation totaled $93.1 billion in 2001. While this figure is based on conservative estimates of regulatory costs, it is significantly larger than either the cost or the benefit estimates produced by EPA.
Like the direct government spending supported by federal taxes, regulations provide American citizens benefits as well as costs. Because the desired benefits of regulation drive the legislative initiatives that create them, the benefits of regulation are often better understood, qualitatively, at least, than the costs. Unlike direct spending, however, there is no mechanism to track the costs of regulations. This working paper is one in a continuing series that attempts to measure the hidden tax imposed by federal regulation.